Taipei, May 2 (CNA) Shares in Taiwan took a beating Thursday led by the bellwether electronics sector, with a sell-off triggered by heavy losses suffered by tech stocks on US markets overnight, dealers said.
Market sentiment also turned cautious amid worries that the US Federal Reserve will continue to delay the timing of a rate cut cycle due to sticky inflation, dealers added.
The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 174.16 points, or 0.85 percent, at the day’s low of 20,222.44 after coming off a high of 20,360.67. Turnover totaled NT$388.86 billion (US$11.94 billion).
The market opened down 0.17 percent and selling of large cap semiconductor stocks continued in the wake of a 3.54 percent plunge on the Philadelphia Semiconductor index and a 0.33 percent fall on the tech-heavy Nasdaq index, as investors shrugged off a 0.23 percent increase on the Dow Jones Industrial Average overnight, dealers said.
The weakness among semiconductor heavyweights, in particular contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) became more apparent in the late trading session, pushing the Taiex below the 20-day moving average of 20,247 points, dealers added.
“Downward pressure on large cap tech stocks on US markets came as investors were unhappy with corporate results,” Mega International Investment Services Corp. analyst Alex Huang said, referring to US tech giants such as artificial intelligence chip designer Advanced Micro Devices, Inc., guidance from which was in line with market expectations.
“As tech stocks had skyrocketed in recent sessions, investors simply wanted to see their guidance beat market expectations,” Huang said. “The in-line forecast simply prompted investors to sell and that mentality spread to the Taiex.”
TSMC, the most heavily weighted stock on the local market, fell victim to the tech plunge on US markets, falling 2.28 percent to close at the day’s low of NT$772.00. sending the Taiex into a tailspin, Huang said.
TSMC’s losses contributed about 145 points to the Taiex’s fall and dragged the electronics index and semiconductor sub-index down by 1.43 percent and 1.79 percent, respectively.
“To me, the selling also represented worries about the Fed’s timing of a rate cutting cycle after the American central bank took a hardline stance,” Huang said.
After concluding the latest policymaking meeting on Wednesday, the Fed issued a statement saying: “In recent months, there has been a lack of further progress towards the committee’s 2 percent inflation objective,” while Fed Chair Jerome Powell told reporters that a rate hike was unlikely to be the central bank’s next move.
iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market value, also shed 1.28 percent to end at NT$154.00, adding selling to the tech sector.
TSMC’s selling spread to other large cap semiconductor stocks with IC packaging and testing services provider ASE Technology Holding Co. down 2.36 percent to close at NT$144.50, and United Microelectronics Corp., a smaller contract chipmaker, down 0.79 percent to end at NT$50.30.
Bucking the downturn, smartphone IC designer MediaTek Inc., No. 3 in market value, rose 0.81 percent to close at NT$1,000.00, and application specific integrated circuit (ASIC) designer Alchip Technologies Ltd. gained 0.96 percent to end at NT$3,150.00.
AI-related stocks were mixed, with AI server maker Quanta Computer Inc. up 0.38 percent to close at NT$261.00 but Giga-Byte Technology Co., a leading graphics card vendor for AI applications, down 3.51 percent to end at NT$288.50.
“The old economy and financial sectors, again enjoyed rotational buying at a time of a weaker tech sector,” Huang said. “Today, the construction industry received a significant boost from hopes that an earthquake in Hualien (on April 3) will result in more urban renewal projects.”
In the construction industry, which rose 3.17 percent, Kuo Yang Construction Co. soared 10 percent, the maximum daily increase, to close at NT$31.15, and Pacific Construction Co. rose 5.49 percent to end at NT$13.45. In addition, Goldsun Building Materials Co. rose 5.72 percent to close at NT$50.80, and Cathay Real Estate Development Co. gained 2.09 percent to end at NT$39.10.
The steel industry also rose 0.60 percent on bargain hunting with shares in China Steel Corp., the largest steel maker in Taiwan, rising 0.40 percent to close at NT$24.95 and Chung Hung Steel Corp. gaining 0.86 percent to end at NT$23.45.
In the financial sector, which rose 0.36 percent on a relatively low valuation, Shanghai Commercial & Savings Bank rose 1.08 percent to close at NT$46.95, and China Development Financial Holding Co. added 0.37 percent to end at NT$13.70.
“After the Taiex fell below the 20-day moving average, the main board is expected to see the nearest technical support at around 20,000 points,” Huang said. “However, with US markets still in volatility, the index could fall below that level.”
According to the TWSE, foreign institutional investors sold a net NT$18.08 billion worth of shares on the main board Thursday.
(By Frances Huang)
Enditem/AW
